Is there a specific definition of 'material judgment' in the Fat Shack FDD that triggers termination?

According to Fat Shack's 2025 Franchise Disclosure Document, a 'material judgment' that could trigger termination is defined within the context of unsatisfied judgments against the franchisee. Specifically, if any material judgment (or several judgments which in the aggregate are material) is obtained against the franchisee and remains unsatisfied or of record for 30 days or longer, it can lead to termination, unless a supersedeas or other appeal bond has been filed.

Additionally, if execution is levied against the franchisee's Fat Shack Restaurant or any of the property used in its operation and is not discharged within five days, or if the real or personal property of the Fat Shack Restaurant is sold after levy by any sheriff, marshal, or constable, it can also result in termination. This clause protects Fat Shack from franchisees who may be facing significant financial distress, which could negatively impact the brand's reputation and the operation of the franchise.

For a prospective Fat Shack franchisee, this means maintaining sound financial standing is critical. Failure to address and resolve judgments promptly, or to manage business operations in a way that avoids levies and foreclosures, could lead to the termination of the franchise agreement. It is important to note the specific timeframes provided for addressing these issues: 30 days for unsatisfied judgments and just five days for discharging levies. Franchisees should ensure they have adequate financial resources and management practices in place to meet these obligations.